221b-gra.use -- MULTIFAMILY PROJECTS INSURED OR ASSISTED UNDER SECTION
221(d)(3)
PROJECT NAME:
PROJECT LOCATION:
PROJECT NUMBER:
USE AGREEMENT AND AMENDMENT OF EXISTING REGULATORY AGREEMENT
FOR MULTIFAMILY PROJECTS INSURED OR ASSISTED
UNDER SECTION 221(D)(3) (BELOW MARKET INTEREST RATE) OF
THE NATIONAL HOUSING ACT AND SUBJECT TO THE
LOW-INCOME HOUSING PRESERVATION AND
RESIDENT HOMEOWNERSHIP ACT OF 1990
WITH A CAPITAL GRANT AND SALE
OF PROPERTY
This Agreement, entered into by the Secretary of Housing and
Urban Development (the "Secretary" or "HUD"), and
("Owner") provides as follows:
WHEREAS, (the
"Project"), a unit project located in
was financed with a Secured Note (the "Mortgage Note") and Deed
of Trust (the "Mortgage") and insured by the Secretary under
Section 221(d)(3) and (d)(5) of the National Housing Act, 12
U.S.C. Section 1715l(d)(3) and (d)(5), and covering real property
as described in Exhibit "A" attached hereto, which mortgage was
recorded in the Recorder's Office of County on
, 19 , as File Number .
WHEREAS, the Project is subject to a Regulatory Agreement or
any amendments thereto, (the "Regulatory Agreement"), dated
, 19 and recorded on , 19 in
the County Recorder's Office of County as document
number at Book Page ;
WHEREAS, the Owner is eligible to prepay the mortgage and
the Project is subject to the provisions of the Low-Income
Housing Preservation and Resident Homeownership Act of 1990
("LIHPRHA"), 12 U.S.C. 4101 et seq., as amended, because it meets
the definition of "eligible low-income housing" in LIHPRHA;
WHEREAS, pursuant to LIHPRHA, the Owner has requested, and
HUD has agreed to provide certain incentives, as set forth
herein, in exchange for the Owner's agreement to continue low-
income affordability restrictions on the Project for the
remaining useful life of the Project;
NOW, THEREFORE, in consideration of the mutual promises set
forth herein, the parties hereby agree as follows:
1. Definitions
a. "Low-Income Tenants" are persons or families whose
incomes are more than 50 percent but not more than 80 percent of
Median Income as determined by HUD with adjustments for smaller
or larger families.
b. "Moderate Income Tenants" are persons or families
whose incomes are more than 80 percent of Median Income but not
more than 95 percent of Median Income as determined by HUD with
adjustment for smaller or larger families.
c. "Plan of Action" is that document submitted by the
Owner, and approved by HUD, pursuant to LIHPRHA requesting
incentives in exchange for maintaining the low and moderate
income character of the Project for its remaining useful life.
d. "Remaining Useful Life" is the period during which
the physical characteristics of the Project remain in a condition
suitable for occupancy, assuming normal maintenance and repairs
are made and major systems and capital components are replaced as
becomes necessary.
e. "Very Low-Income Tenants" are persons or families
whose incomes are not more than 50 percent of Median Income as
determined by HUD with adjustments for smaller and larger
families.
2. Term. This Agreement shall remain in effect for the
Remaining Useful Life of the Project, as that term is defined in
Paragraph 1 of this Agreement. The Owner may petition HUD to
make a determination that the remaining useful life of the
Project has expired not less than fifty years from the date of
approval of the Plan of Action for the Project. In making such a
determination, HUD shall presume that the useful life of the
Project has not expired, and the Owner shall have the burden of
proof in establishing such expiration. HUD will not determine
that the useful life of the Project has expired if such
determination results primarily from failure to make regular and
reasonable repairs and replacement, as become necessary. Tenants
and interested persons and organizations may provide comments on
the Owner's petition and may appeal HUD's determination.
3. Use Restriction. The Project shall be used solely as
rental housing for Very Low-, Low- and Moderate-Income Tenants,
except to the extent that commercial use has been approved by the
Commissioner. If there is any approved commercial use or non-
residential units in the Project, rents from the units receiving
Section 8 assistance shall not be used to pay any expenses
incurred with respect to the commercial use or non-residential
units.
4. Maintenance of Affordability.
a. Paragraphs 4(a), (d), (f), (g), (h), and (i) of the
Regulatory Agreement are deleted in their entirety. The Owner,
to the extent practicable, will maintain the Project as
affordable to the following proportions of Very Low-, Low- and
Moderate-Income Tenants:
No. of Units
Very Low-Income Tenants
Low-Income Tenants
Moderate-Income Tenants
In renting vacant units to new tenants, the Owner may deviate
from the above Tenant Profile to the extent necessary to keep the
project financially viable, only with the approval of HUD.
b. The Owner may rent to a higher proportion of Very
Low-Income Tenants than required by the foregoing tenant income
profile. However, HUD does not agree to provide Section 8
assistance beyond that which is already provided under an
existing Section 8 assistance contract.
c. No tenant in occupancy as of the effective date of
this Agreement ("Current Tenant(s)") shall be required to
relocate on the basis of his or her income.
d. Paragraph 4(b) of the Regulatory Agreement is
amended to read as follows:
To the extent that it does not conflict with the
tenant income profile established in Section 222 of
LIHPRHA, preference for occupancy shall be given to
those families displaced as a result of a major
disaster as determined by the President or as a result
of governmental action;
5. Distributions and
Amendment of Regulatory
Agreement. Paragraph
6 of the Regulatory
Agreement is amended to
read as follows:
The Owner shall not
make, or receive and
retain, any
distribution of
assets or any income
of any kind of the
project except
on the following
conditions:
All distributions shall be made only as of or after the
end of a semiannual or annual fiscal period, and only
as permitted by the law of the applicable jurisdiction;
all such distributions in any one fiscal year shall be
no more than $ 00.00 and the right to such
distributions shall be cumulative.
6. Reserve for Replacements and Amendment of Regulatory
Agreement. Paragraph 2(a) of the Regulatory Agreement is amended
by adding the following language to the end thereof:
The Secretary will not approve the release of funds
from the Reserve for Replacements account if doing so
would reduce the balance below an amount equivalent to
one month's maximum gross rent potential, except in
emergencies requiring immediate repairs or to avoid a
default on, or assignment of, the mortgage insured by
the Commissioner.
7. Savings Due to Management Efficiencies. Any net savings
from reductions in operating expenses due to management
efficiencies as determined by the Secretary shall be deposited
into the Reserve for Replacements Account. The Owner may have
access to these funds on a semiannual basis upon a finding by the
Commissioner that a withdrawal will not reduce the balance in the
Reserve for Replacements Account below that required in Paragraph
2(a) of the Regulatory Agreement, as amended by this Agreement,
and that the Owner is maintaining the property in accordance with
the Housing Quality Standards set forth in 24 CFR Part 886.
8. Displacement. No Current Tenant shall be displaced,
except for good cause.
9. Civil Rights Requirements. The Owner will comply with
the provisions of any Federal, State or local law prohibiting
discrimination in housing on the basis of race, color, religion,
sex, national origin, handicap or familial status, including but
not limited to: Title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d-1), the Fair Housing Act (42 U.S.C. 3601), Executive
Order 11063, Section 504 of the Rehabilitation Act of 1973 (29
U.S.C. 794), and all requirements imposed by or pursuant to the
regulations of the Department of Housing and Urban Development
implementing these authorities, including, but not limited, to 24
CFR Parts 1, 100, 107, and 110, and Subparts I and M of Part 200.
10. Housing Quality Standards. The Owner shall maintain
the Project in good repair and condition in accordance with the
applicable local codes.
11. Violations of this Agreement. If HUD determines that
the Owner has violated the terms of this Agreement, including
compliance with the Housing Quality Standards, HUD shall notify
the Owner of its determination and the Owner shall have 90 days
in which to cure the violation. At the expiration of the 90
days, HUD shall reinspect the Project or take other investigative
steps in order to ensure compliance. The failure to cure any
violation within 90 days of notification of the violation may
result in, but not be limited to, the forfeiture of, or reduction
in, the Owner's annual distribution; reduction in, or suspension
of, the Section 8 assistance, if any; acceleration of debt
secured by the Project; payment of relocation expenses to tenants
admitted to the Project inconsistently with the tenant income
profile established in this Agreement; and the imposition of any
other sanctions authorized in law.
12. Agreement Binding Upon Successors and Assigns. Upon
conveyance of the Project during the term of this Agreement, the
Owner shall require its successor or assignee to assume its
obligations under this Agreement. In any event, this Agreement
shall be binding upon the Owner's successors and assigns.
13. Reports. The Owner shall furnish the Secretary with
such reports concerning the financial condition, operation and
condition of the Project as the Secretary may prescribe.
14. Reimbursement of Assistance. If, within ten years of
plan of action approval, the Owner becomes affiliated with, or
transfers title in the Project to, a for-profit entity, the
Secretary may seek reimbursement from the Owner for the
difference between the amount of incentives approved in the plan
of action and the amount of incentives which the for-profit
entity would have been entitled to receive under LIHPRHA. Any
owner receiving incentives or other property of the project in
violation of this agreement shall immediately deliver such
property to the project and failing to do so shall hold such
property in trust.
15. Incorporation of Regulatory Agreement by Reference.
Paragraphs 2(a), 2(c), 4(c), (4)(e), 4(j), 5, 6, 7(b), 7(d),
7(f), 7(g), 7(j), 10, 14 and 18 of the Regulatory Agreement (HUD
Form 1733 dated 10/69), are adopted and incorporated by reference
herein. In the event that the Owner prepays all mortgage note or
notes as are described in the Regulatory Agreement or any
Regulatory Agreement amendments or all FHA mortgage insurance is
terminated, the provisions listed above shall remain in full
force and effect, binding the Owner, its successors and assigns
as if the Mortgage Note were not prepaid or the mortgage
insurance terminated, except that in the case of such prepayment
or termination:
a. the phrase "the Secretary" shall be substituted for
the term "Mortgagee" throughout the adopted language of the
Regulatory Agreement; and
b. the "mortgaged property" or "mortgaged premises"
referred to in the Regulatory Agreement, shall be the Project.
16. Enforcement. In the event of a breach or threatened
breach of any of the provisions of this Agreement, any eligible
tenant or applicant for occupancy, or the Secretary or his or her
successors or delegates, may institute proper legal action to
enforce performance of such provisions, to enjoin any acts in
violation of such provision and to recover damages (including
refunds, with interest, on rent overcharges), and/or to obtain
whatever other relief may be appropriate.
17. Severability. The invalidity, in whole or in part, of
any provision of this Agreement shall not affect or invalidate
any remaining provisions.
18. Impairment of Regulatory Agreement. The terms and
provisions of the Regulatory Agreement shall continue in full
force and effect except as modified herein. Conflicts between
this Agreement and the Regulatory Agreement shall be resolved in
favor of this Agreement.
19. Execution of Other Agreements. The Owner agrees that
it has not and will not execute any other agreement with
provisions contradictory of, or in opposition to, the provisions
of this Agreement, and that in any event, the provisions of this
Agreement are paramount and controlling as to the rights and
obligations set forth and supersede any other conflicting
requirements.
20. Subsequent Statutory Amendments. If revisions to the
provisions of this Use Agreement are necessitated by subsequent
statutory amendments, the Owner agrees to execute modifications
to this Use Agreement that are needed to conform to the statutory
amendments. In the alternative, at HUD's option, HUD may
implement any such statutory amendment through rulemaking by
amending 24 C.F.R. Part 248
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and have agreed that it shall be effective as of the
______ day of ________________, 19 .
OWNER
_____________________________ _____________________________
Witness
SECRETARY OF HOUSING AND
URBAN DEVELOPMENT
_____________________________ ____________________________
Witness BY:
Director
Office of Multifamily Housing
HUD, Field Office
STATE OF )
) SS:
COUNTY OF )
Before me, __________________, a Notary Public in and for
said State, on this _____ day of _______________, 19 ,
personally appeared _____________________, who is personally well
known to me to be the Director, ____________________________, and
the person who executed the foregoing instrument by virtue of the
authority vested in him by Section 204(g) of the National Housing
Act, as amended, and I having first made known to him the
contents thereof, he did acknowledge the signing thereof to be
his free and voluntary act and deed on behalf of Henry G.
Cisneros, as the Secretary of Housing and Urban Development for
the uses, purposes and considerations therein set forth.
Witness my hand and official seal this ____ day of
____________, 19 .
(SEAL)
____________________________
Notary Public
My commission expires ____________________, 19___.
STATE OF )
) ss:
COUNTY OF )
On this ____ day of ________________, A.D., 19 , before me,
a Notary Public in and for said county and State, residing
therein, duly commissioned and sworn, personally appeared
_____________________________, and proved to me on the basis of
satisfactory evidence to be the ________________________ of the
corporation that executed the within instrument and acknowledged
to me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this Certificate first above
written.
__________________________________
NOTARY PUBLIC
(SEAL)
My Commission expires _____________________, 19___.